Global | Updated forecasts: World growth to soft land, amid trade tensions and stimulus

Summary

Global growth continues in a smooth downward path, led by the weakness of the industrial sector and exports due to trade tensions. Persistent low inflation led central banks to reassess their monetary policy stance. We revised downward our world GDP forecast 0.1pp to 3.3% for 2019 and 2020, with strongly downward risks

Key points

• Key points:
• The impact of trade tensions is already apparently and could be sizeable in the long term. Central banks’ new measures (lower rates and other accommodative measures) intend to address this supply shock in a low inflation environment while maintain financial tensions under control.
• We maintain broadly unchanged growth projections for China, the US and the Eurozone, but Latin America figures are revised downwards despite more accommodative monetary policies and less pressure on exchanges rates.
• Risks remain strongly on the downside, linked to protectionism, but also to US recession and China’s leveraged exacerbated by new stimulus, and could be magnified by financial vulnerabilities.

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